Decline in gasoline prices drives down CPI
Falling gas prices caused U.S. consumer prices to drop at the fastest rate in four years.
The U.S. Bureau of Labor Statistics reported last Thursday the Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.4 percent in April on a seasonally adjusted basis. Over the last 12 months, consumer prices rose 1.1 percent before seasonal adjustment. That is well below the Fed's 2 percent inflation goal. The U.S. central bank targets a different gauge of prices that tends to run cooler than the Labor Department's index.
As was the case in March, much of April’s decline in prices was fueled by an 8.1 percent decline in gasoline costs in the seasonally adjusted all items index, the biggest decline since December 2008. The fuel oil index also declined while the electricity and natural gas indexes increased; the net result was a 4.3 percent decrease in the energy index.
The all items index increased 1.1 percent over the last 12 months, the smallest 12-month increase since November 2010. The core CPI, which strips out food and energy, increased 1.7 percent over the same time period; this was its smallest 12-month increase since June 2011. The food index rose 1.5 percent while the energy index declined 4.3 percent.